Market Report.
🌍 The conflict in the Middle East seems to be reaching an increasingly humiliating tone. After hours of waiting, Iran simply confirmed that it would not be attending the second round of talks in Pakistan.
🎖️ Retired Colonel Douglas Macgregor, a former adviser to the US Secretary of Defence, states that “the notion that we were going to hold talks again in Islamabad was always fiction” and describes how “Vice-President Vance stood up during the first meeting to go out and take a call from Mr Netanyahu”, which shows that “Mr Netanyahu, not Mr Trump, is in charge”.
📱 Even though he said he wouldn’t, president Donald Trump posted at 1:00 p.m. local time, that the United States would seek to extend the ceasefire deadline indefinitely. Just minutes later, at 1:10 p.m., Iranian officials responded that they no longer recognized the ceasefire framework and would act according to their national interests, adding that Iran “may or may not” abide by Trump’s announcement.
🕊️ President Trump unilaterally extended the Iran ceasefire just hours before expiration, citing Tehran’s government being “seriously fractured,” and told CNBC he expects to make a “great deal” with Iran.
🚫 Tehran signals reluctance to engage in diplomatic efforts despite Trump’s ceasefire extension, adding fresh uncertainty to Middle East conflict resolution prospects and suggesting Iran views current arrangements as insufficient or unacceptable for meaningful peace negotiations.
🚢 Trump maintains continued blockade of Iran’s ports and shores, keeping the Strait of Hormuz effectively closed and preventing normal energy commerce, demonstrating that military pressure continues alongside diplomatic initiatives despite ceasefire announcements and extension efforts.
🌊 It seems that the situation has reached a point where Iran and the rest of the world want the Strait of Hormuz to remain open, but Trump must keep it closed; otherwise, “there can never be a deal with Iran”.
❓ Pero hay varias preguntas flotando en el aire que pueden afectar a los mercados en las proximas horas.
❔ The first question is, is the cease-fire because of a willingness to talk, or a lack of ammunition?
🧨 The U.S. military has significantly depleted its missile stockpile during the seven-week Iran war, expending at least 45% of Precision Strike Missiles, over 50% of THAAD missiles, and nearly 50% of Patriot air defense interceptor missiles, creating a “near-term risk” of ammunition shortages in future conflicts within the next few years.
🏗️ Pentagon officials acknowledge the military currently maintains sufficient bombs and missiles to continue combat operations against Iran if the ceasefire collapses, but stockpiles are insufficient to confront near-peer adversaries like China, requiring one to four years for replenishment and several additional years for expansion.
📑 The Trump administration signed contracts to expand missile production earlier this year, but delivery timelines remain three to five years, creating a significant vulnerability window.
🗣️ President Trump claimed the U.S. is not running short of weaponry while simultaneously requesting additional Pentagon funding specifically for missiles due to Iran war impacts on existing stockpiles, creating apparent contradictions between public statements and actual funding requests.
🎖️ Joint Chiefs of Staff Chairman General Dan Caine and other military leaders previously warned Trump that a protracted Iran campaign could significantly impact U.S. weapons stockpiles, particularly those supporting Israel and Ukraine.
🏭 In previous reports, we mentioned the White House and the Pentagon’s intention to involve other industries in the production of weapons and ammunition, in particular the Pentagon’s discussions with General Motors, Ford Motor, and potentially with GE Aerospace and Oshkosh. This scenario is becoming increasingly likely given how events are unfolding. Meanwhile, Trump has announced an increase in the US military budget to $1.5 trillion, a colossal and record-breaking figure. If we do the maths, this could mean a great deal of business for these ‘converted’ industries.
📈 We have not found any ETF that holds significant weightings in both the automotive and defence sectors; the only exception is the First Trust Nasdaq Transportation ETF, which holds GM and Ford at significant weightings (~8% and ~7% respectively) and also includes Oshkosh in a marginal amount (0.82%). Exposure to various ETFs or shares could be of interest in the coming months – please note, this is not investment advice.
❓ The second question is: is extending the ceasefire only to buy time in the face of a new wave of attacks on Iran?
✈️ A significant uptick in U.S. Air Force activity has been observed heading into the Middle East, alongside a sharp rise in military cargo operations compared with pre‑war levels. In the two weeks before hostilities began (February 14–28), 542 cargo flights were tracked en route to the region. By contrast, during the ceasefire period (April 8–21), 819 cargo flights were recorded, with the majority landing in the Middle East, underscoring the scale of logistical mobilization despite the pause in fighting.
🛢️ Brent crude oil prices hover near $100 per barrel due to ongoing Hormuz blockade, having surged over 55% since war outbreak from approximately $72 on February 27 to nearly $120 at peak, reflecting sustained supply disruption fears and inflationary pressures above pre-war levels.
❓ The third question, and perhaps the most important one: Netanyahu seems to be determining the US position; does Israel agree with this extension of the ceasefire?
🇮🇱 It remains unclear whether Israel agrees to the extension. Coverage repeatedly highlights uncertainty surrounding Israel’s position, indicating media and analysts cannot definitively predict whether Israel will maintain ceasefire compliance, escalate military operations, or withdraw from southern Lebanon positions.
🔥 Israel and Hezbollah are engaged in limited military exchanges in southern Lebanon under a separate 10-day ceasefire agreement that commenced earlier, with both parties maintaining some level of military activity despite the truce arrangement.
🪖 Israel’s maintenance of troops in a security zone indicates strategic positioning to respond quickly to Hezbollah, suggesting Israel retains military readiness despite ceasefire arrangements.
🇪🇺 Europe and Israel situation:
🇧🇪 Belgium has officially become the fourth European country to request the suspension of the EU’s association agreement with Israel, joining Spain, Ireland and Slovenia in calling for a review of the bloc’s ties with the country.
✈️ War hits European airlines.
📉 This report was one of the first to claim that European kerosene imports from Hormuz were close to 50%, and that this would affect airlines in full. In fact, in media interventions, we did a study on the bearish GAPs formed by the active conflict in the main European and Asian airliners (the most vulnerable).
🛫 Well, Lufthansa has announced plans to cut 20,000 flights in an effort to conserve fuel as prices continue to surge, underscoring the mounting strain on Europe’s aviation sector. The move adds to concerns that the region could be edging toward a broader economic crisis amid escalating energy costs and supply disruptions.
💬 According to Trump, US companies should not request reimbursement for tariffs.
⚖️ President Donald Trump stated on CNBC’s “Squawk Box” that he will “remember” U.S. companies that do not seek refunds for tariffs he unilaterally imposed, which the Supreme Court ruled illegal in a 6-3 decision, effectively threatening political consequences for companies claiming legitimate refunds.
🏛️ The Supreme Court ruled Trump’s so-called IEEPA tariffs illegal in a 6-3 decision, and U.S. Customs and Border Protection opened a refund portal allowing importers to seek more than $160 billion in potential tariff reimbursements for duties already paid on imported goods.
🏢 Large companies including Apple and Amazon have not yet filed refund requests despite being eligible, potentially because they fear “offending” Trump or facing political retaliation, creating a chilling effect on companies’ willingness to claim legally owed refunds. Levi Strauss expects approximately $80 million in tariff refunds for duties paid on denim and apparel imports from global manufacturers.
👏 Trump characterized companies not seeking refunds as “brilliant” and said he would be “very honored” by their decision, using positive language to incentivize corporate non-compliance with refund opportunities and reward political loyalty over financial self-interest.
Market View.
📉 Markets reacted with disappointment after the expected round of negotiations failed to take place, as Iran did not attend. Despite the setback, the overall pullback has remained relatively contained, as Donald Trump announced an extension of the ceasefire in an effort to prevent sharper declines. However, the blockade of the Strait of Hormuz remains in place.
🛢️ Spot Brent crude rebounded during yesterday’s session, temporarily moving back above $100 per barrel, before retreating to around $97.70.
📈 Equities initially declined, with E‑mini S&P 500 futures falling below 7,100 before recovering to approximately 7,145. Nasdaq 100 futures dropped to 26,550 but subsequently rebounded towards recent highs near 26,840.
💵 The US dollar index (DXY) also strengthened amid renewed Middle East tensions, rising above 98.50 before easing back to around 98.30. This triggered volatility in EUR/USD during yesterday afternoon’s session; the pair is currently holding near 1.1750.
🇪🇺 In Europe, markets appear to be opening calmly. DAX 40 futures are recovering from yesterday’s pullback and moving towards 24,500, while Euro Stoxx 50 futures are regaining a constructive tone and trading above 5,900.
🥇 Gold futures slipped below $4,800 per ounce amid yesterday’s tensions but are now stabilising around $4,795.
₿ Finally, Bitcoin has been advancing in recent hours towards $78,500, with minor pullbacks during the last hour, showing resilience despite the current geopolitical backdrop.
